Correlation Between Ross Stores and Hoteles City
Can any of the company-specific risk be diversified away by investing in both Ross Stores and Hoteles City at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ross Stores and Hoteles City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Hoteles City Express, you can compare the effects of market volatilities on Ross Stores and Hoteles City and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ross Stores with a short position of Hoteles City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Hoteles City.
Diversification Opportunities for Ross Stores and Hoteles City
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ross and Hoteles is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Hoteles City Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoteles City Express and Ross Stores is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ross Stores are associated (or correlated) with Hoteles City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoteles City Express has no effect on the direction of Ross Stores i.e., Ross Stores and Hoteles City go up and down completely randomly.
Pair Corralation between Ross Stores and Hoteles City
Assuming the 90 days trading horizon Ross Stores is expected to generate 1.29 times more return on investment than Hoteles City. However, Ross Stores is 1.29 times more volatile than Hoteles City Express. It trades about 0.45 of its potential returns per unit of risk. Hoteles City Express is currently generating about 0.02 per unit of risk. If you would invest 286,000 in Ross Stores on August 31, 2024 and sell it today you would earn a total of 26,485 from holding Ross Stores or generate 9.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 38.1% |
| Values | Daily Returns |
Ross Stores vs. Hoteles City Express
Performance |
| Timeline |
| Ross Stores |
| Hoteles City Express |
Ross Stores and Hoteles City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Hoteles City
The main advantage of trading using opposite Ross Stores and Hoteles City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Hoteles City can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hoteles City will offset losses from the drop in Hoteles City's long position.| Ross Stores vs. KB Home | Ross Stores vs. Grupo Sports World | Ross Stores vs. The Bank of | Ross Stores vs. Hoteles City Express |
| Hoteles City vs. CEMEX SAB de | Hoteles City vs. Grupo Financiero Banorte | Hoteles City vs. Grupo Bimbo SAB | Hoteles City vs. Fomento Econmico Mexicano |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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